It seems that each day brings new headlines about financial turmoil and a tumultuous stock market, with the result that the average investor may be uncertain about how to protect their wealth.
According to a report in the Wall Street Journal, some financial advisors are attempting to keep their clients’ money safe by increasing their cash holdings and exposure to cash and cash-equivalent investments.
Pran Tiku, a wealth manager for Peak Financial Management, told the news provider that he has been selling off lower-quality bonds with a higher yield in order to raise cash.
"If the credit crunch is as ominous as it seems and does not have a resolution, then cash becomes a very important investment to hold," he said.
In a more even-keeled market, Tiku said that he holds at least five percent of someone’s portfolio in cash and cash-equivalent short-term investments.
However, the current climate has prompted him to raise this proportion to 30 percent, while decreasing the amount held in bonds from 30 to seven percent.
Last week, Fortune magazine writer Eugenia Levinson suggested that people consider purchasing tax-exempt money market funds, which currently offer an unusually high average yield.